Interested in learning more about the different types of entrepreneurship and the differences between them? Let’s get started below.
In today’s economy, many people are going the entrepreneurial route and it’s easy to see why.
The draws of building your own business, control over the direction of the business, the ability to set your own hours, and the opportunity to work towards something that is important to you personally.
While many entrepreneurs enter into business with a great amount of passion, drive, and focus, a large percentage of new startups end up failing.
One reason for this is a lack of understanding of the type of business that you are trying to build.
Chances are that your startup will not be pulling in Amazon-level revenues within the first few years of operation, and improperly scaling your business can lead to devastating consequences.
5 Types of Entrepreneurship
Before you embark on your next entrepreneurial venture, it’s important to take some time to understand the different types of entrepreneurship, and consider which business model is the best for the brand you are trying to build.
Below, you’ll find a brief breakdown of the 5 different types of entrepreneurship and what sets each one apart from the other.
Small Business & Niche Entrepreneurship
The vast majority of businesses never become multinational cash cows that trade on the NYSE, and there’s nothing wrong with that.
Generally speaking, many small businesses are not highly profitable, but exist to support the families of the owners and their employees.
While these types of businesses do not typically scale to a national or international level, they do serve a very important function within the economy, and they enrich people’s lives every day.
Some examples of this type of business could be a local cupcake shop, an online store selling coffee spoons that look like animals, or an antique shop selling only artifacts from the medieval era.
These types of businesses are typically funded by family and friends, and will probably never attract outside capital or investments.
In many cases, owners of these types of businesses try to scale up and end up making investments that don’t pay dividends.
If you’ve found your niche and you’ve garnered steady business, sometimes the best move is to simply continue to focus on what your business does best.
Many new entrepreneurs make the false assumption that their business has to be some revolutionary new technology that will change the world forever.
This couldn’t be further from the truth.
While the impulse of many entrepreneurs is to create something entirely new that shows off how inventive they are, sometimes, adopting the business plan of another successful company that already exists is the smartest move.
Remember, the idea here doesn’t need to be that you have to compete to take the number one spot in your niche. The idea is to compete for a piece of the pie.
At the end of the day, imitative entrepreneurship involves emulating another business that is already successful, but putting your own unique brand and spin on it.
The visionary entrepreneur is typically the most glorious type of entrepreneur, but this is also probably one of the most difficult and risky types of entrepreneurship to undertake.
These types of companies are the ones whose products revolutionize the way that we live and appeal to the masses.
Household names such as Tesla, who has completely changed the electric car industry, and Amazon, who has revolutionized the world of online shopping, are prime examples of visionary entrepreneurship.
While there are certainly visionaries who have been successful that you may have never heard of, the vast majority of people who try to create a revolutionary product end up failing.
Some reasons for this are that it is very difficult to get consumers to buy an entirely new product, and creating an entirely new product often requires a great deal of capital.
If you are planning to steer your business in a visionary direction, take the time to be sure that your product is something that is adoptable and worth the time and effort you plan to put into it.
Some of the most successful entrepreneurs are serial opportunists. Taking advantage of the trends of the time can be a profitable attribute of a business, and some companies organize simply to jump on an opportunity.
Take, for instance, the countless number of companies that have arisen during the COVID-19 pandemic that are selling face masks, hand sanitizers and more.
These companies saw an opportunity to fill the need for these types of products, and acted quickly to profit from the demand.
Being an opportunistic company is typically not a viable long-term business plan, as trends tend to change so quickly.
These companies that are selling face masks now will probably have to adjust their business plan when the pandemic is over.
However, if they make the right moves and pivot their business away from face masks when the time comes, this short sprint of business could prove to be very profitable for them.
An essential trait of any successful business owner is to be aware of the trends of the time and to understand how these trends affect their business.
An opportunist entrepreneur, on the other hand, organizes their business for the sole purpose of taking advantage of those trends.
The improvement entrepreneur is somewhere between the imitative entrepreneur and the visionary entrepreneur.
Sometimes, products and technologies do not need to be completely reinvented, but they could use some improvement.
The improvement entrepreneur identifies inefficiencies in existing products and improves them.
Their purpose is to improve an existing product so that it is easier to use, provides more utility to its user, or is available to consumers at a lower price.
Take, for instance, a point-of-sale system utilized in a restaurant. The first point-of-sale systems were very simple and did not provide much functionality that was helpful for restaurants apart from seating and billing patrons.
Thanks to improvement entrepreneurs, however, many point-of-sale systems today provide a much-improved range of functions such as portion control and waste management.
A good thought exercise for aspiring entrepreneurs is to think about the products that you use every day, and then think about how these products could be improved.
You just might stumble upon your next entrepreneurial venture.
In conclusion, there are many different types of entrepreneurship that each have their own variety of characteristics:
- Small business & Niche Entrepreneurship involves building a small business that will appeal to a smaller market.
- Imitative Entrepreneurship involves taking an already-successful business plan and adopting it to your brand.
- Visionary Entrepreneurship involves creating a revolutionary new product.
- Opportunistic Entrepreneurship involves identifying a limited opportunity and taking advantage of it.
- Improvement Entrepreneurship involves taking an existing product and improving upon it.
Deciding which types of entrepreneurship you want to pursue is the first step in becoming your own boss.
Don’t miss our in-depth guide to Entrepreneurship: Everything You Ever Needed to Know About Entrepreneurship
Pin this graphic to Pinterest to save for later!